Multi-Family Investing in Southern California

13 Replies

I have been educating myself about real estate in the DMV area since 2014, however, I just relocated to Orange County, CA. I'm really interested in making multi-families my primary focus, but I had a couple of questions.

1. How does the traditional loan approval work for small multi-families. Does the mortgage and other debts need to be 40% or less of your gross income like single families or are other considerations taken into account?

2. Is Southern California a good place for multi-family investing?

I've had a few deals over the past few years that I did not go through with for various reasons and I am eager to finally bring my first deal across the finish line. Any advice would be appreciated.

Hi. I am in San Diego looking for opportunities in southern California as well. What would you like to have your opportunities look like? Values, cash flow, doors, etc

@Asya Monds  Hello Asia.  Have you been to a few of the meetings here in our area?  What type of multis are you looking at?  2-4 units will be a regular mortgage, 5+ units will be commercial.

@Christopher Hunter I haven't been to the meetings in the area. Do you recommend I join the OCREIA or the OC Real Estate Club? For my first property, I would like a 2 to 4 unit.

@Hassan O. I'm looking for 2-4 units with a cap rate of at least 5%. I don't mind one that needs a little bit of work, but in a decent area (a Class B property). I would to stay in the OC area, but am open to other areas of So Cal with the right partnership since I don't know the areas well.

Cool. But what price points and cashflows are desired? BTW, never use cap rate to evaluate a property under 5 units. It's the amount of income you want to make that important

@Hassan O. Thanks for the advice, Hassan. That's why I'm on here. :-) My max is approximately $750,000 and a cash flow of around $500/month.

This post has been removed.

@Asya Monds MF is a great idea especially in SoCal.  Speak to a lender, lots of options for 2 units with fha, conventional and conforming and nonconforming.  Best of luck.

@Hassan O. Are you looking at commercial 5+ or 2-4 unit in San Diego? How is that coming along for you?

@Asya Monds and @Hassan O. Southern California can and is a great place to invest in multi-family properties, however, you have to understand that cash flowing properties here are not very common and most investors buy for appreciation.

When looking at investing if you're able to do a multi family and live in one of the units, stay for a few years and then sell you typically get the best returns.

There are a few areas in Southern California that you can cash flow but it is very difficult to find those properties so you have to be open to different options.

If you're able to do an FHA loan do it, wait 1-2 years and either refinance or sell the property so you can re-invest into another property here or out of state for cash flow.

@Michael Tripp This is extremely helpful. I've been struggling to find cash flowing properties and I thought maybe there was something I was missing. Do you support any areas in Orange County or just LA?

@Asya Monds , yes it's definitely more difficult to find cash flowing properties here in Southern California.  

Yes, I also handle properties in Orange County.

Unfortunately, there are even less multi unit properties in Orange County compared to Los Angeles but they do exist.  

There are a few on the market right not that while they don't cash flow they do allow for one unit to be vacant, allow debt pay down and will appreciate.

Please feel free to reach out if you need any assistance.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here